1 Technical Meeting Closure : Winding-up declaration and Commission procedures Elina Hakonen-Meddings DG REGIO J4 Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

2 Commission procedures 1.WUD and Commission procedures (E. Hakonen-Meddings) - Experiences Legal requirements + guidance - Preparation - Content of WUD + report - Commission procedures for analysing WUD - Possible financial corrections 2.Reporting data on irregularities (L. Högnäs) 3.The planned audit approach (M. Schelfhout) Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

3 Experiences from closure Lengthy process resulting in long delays in final payment/closure Main problems with WUD –Insufficient coverage of sample checks –Checks not of sufficient quality –Insufficient information on spread, coverage and sampling method –High error rates not analysed –Irregularities/errors not treated satisfactorily –No quantification of impact of irregularities –No clear opinions given –Inconsistency between documents/conclusions –Final statements of expenditure changed after WUD –Delays in receiving additional information requested from MS –Key personnel changed Number of flat rate corrections applied Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

4 How to learn from past to ensure successful closure of Plan, prepare in time, sufficient resources Coordinate with all relevant parties Ensure continuity also after submission Close/treat irregularities before closure Be aware of riskier expenditure declared at the end of the period and of large "replacements" of irregular expenditure Allow time for additional checks/work needed Submit before deadline to avoid risk of inadmissibility Ensure consistency of documents/conclusions Follow regulations and guidelines Important: Last opportunity to ensure low error rates Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

5 Legal requirements and Guidance for WUD Art. 38.1f) of Reg. 1260/1999, + Art (final payment) Art Annex III of Regulation 438/2001 Guidelines on closure of Assistance ( ) from the SF (COM(2006)3424 of 1/08/2006) : 4.3, annex 2 Guidance note on closure of INTERREG III programmes (COCOF Ref /0078/02 ) Register of Questions and Answers EC Internal: Manual of Procedures (checklists + standard notes) In preparation: Internal guidance for corrections to be applied at closure to ensure equal treatment and proportionality at closure Audit enquiry (EPM) for closure Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

6 Submission deadlines DG REGIO to receive 368 WUD for ERDF OPs Submission deadlines for all three closure documents (final report, final expenditure declaration and WUD): 15 months after final date for eligibility of expenditure (Art of Reg. 1083/2006) End of eligibility dateDeadline for submission of WUD No of ERDF OPs / / With extension to With extension to Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

7 Preparatory work in MS MA + IB: Receive expenditure claims from beneficiaries Complete remaining issues for Art 4 checks Compile final expenditure declaration for PA Ensure audit trail Ensure that all errors have been treated satisfactorily and all recommendations followed Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

8 Preparatory work in MS PA: Prepare certificate of final expenditure Satisfy itself that all errors have been treated satisfactorily and all recommendations followed Request more information or do own verifications where necessary Summary table on irregularities Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

9 Preparatory work in MS Bodies responsible for Art. 10 checks: Complete final sample checks Ensure sufficient coverage (5%, even spread over period, mix of types and sizes of operations, all main IBs or beneficiaries) Identify systemic errors, carry out further checks to determine/quantify problem If error rate above 2%, take appropriate measures (corrections, or further checks to determine/quantify problem) Ensure that recommendations (own/EU/ECA) fully implemented Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

10 Work by independent body Analyse quality of system audits Analyse quality of sample checks Analyse sufficiency of coverage Analyse frequency of errors, systemic character, error rate Analyse sufficiency of treatment of irregularities/ errors (by national auditors/EU/ECA) Analyse closure procedures by MA and PA Additional work if necessary Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

11 Winding-up declaration Provided for each programme (also for Interreg) –Multi-fund OPs may submit WUD by fund –Very exceptional cases multiple declaration may be accepted An indicative model of the WUD in Annex III to Regulation 438/2001. (Prior agreement should be sought from EC if model not followed) That declaration should be prepared in accordance with Article 38(1)(f) of Regulation 1260/1999 and Chapter V of Regulation 438/2001. Specific guidance on the preparation and contents of the winding-up declaration in Annex 2 to closure guidelines (and Interreg closure guidance). Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

12 Winding-up declaration Summarises conclusions of the checks carried out during all previous years and assesses validity of the application for payment of the final balance as well as the legality and regularity of the transactions concerned (Art 38(1)(f) of 1260/1999) Includes a summary on all irregularities: MS requested to attach a table in an electronic format with the list of irregularity cases to their WUD, clarifying amounts recovered, waiting for recovery or irrecoverable (Art 8 of 438/2001) Is accompanied by a report which shall include all relevant information to justify the declaration including a summary of the findings of all checks carried out by national and Community bodies to which the independent body has had access. (Art. 16 of 438/2001) MS may attach their own opinion to WUD if they consider it necessary (Art 38(1)(f) of 1260/1999) Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

13 Content of WUD Model of Annex III to Reg. 438/2001: Introduction: person and intervention Scope of the examination - Report attached (details on procedure, info used, conclusions of checks, i.e. all relevant information to justify the declaration) Observations –limitations –Frequency of errors/irregularities, systemic nature, satisfactory treatment (Table on irregularities) Conclusion: unqualified, qualified, no opinion Date and signature Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

14 WUD Report (closure guidelines annex 2) Details of independent body Details of programme Summary of controls carried out under Article 10 Work undertaken by independent body Limitations to the scope of examination Treatment of errors and irregularities Frequency of errors and irregularities Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

15 Commission procedure for WUD No regulatory deadline for assessment of WUD. To be realised within a "reasonable period". Reminder to MS sent 2 months prior to the submission deadline (final eligibility date + 13 months) Non-submission or late submission of the WUD (final eligibility date + 15 months + 14 calendar days): If WUD is not received, closure will be carried out on the basis of certified statement of final expenditure and final report + automatic decommitment of unpaid balance + correction. Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

16 Admissibility Check of WUD Internal delay of 5 days Checklist (is WUD signed, dated and prepared by WUB, is there an opinion, a report, a table of irregularities, does it follow model?) MS will be informed if further information is to be provided or if WUD is not admissible OLAF is consulted on all fraud cases and all irregularity cases are checked in the OLAF database. Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

17 Quality Checks of WUD Analysis based on a checklist Results of all previous audit work carried out and EC assessment of residual risk taken into account Internal delay days in DG REGIO Inter-service consultation on draft conclusions for multi-fund programmes or when joint authorities with other funds Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

18 Checklist Sections: Basic requirements Art. 10 System audits Art. 10 Sample checks Work carried out by WUB Audits by other national or Community bodies Frequency of errors and irregularities Observations and conclusion of WUD Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

19 Checklist Overall conclusion of the auditor: –Accept WUD without additional action needed –Accept WUD under condition that a deduction to payment claim is made (correction) –Interruption requesting for information or additional audit work from MS (Art 17 of Reg. 438/2001) –Interruption due to additional audit work by EC (EPM for closure) Assessment of residual risk of WUD and residual risk estimated on the basis of all audit work done over the programming period => Is further EC audit on-the-spot necessary Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

20 Financial corrections may be applied when: Lack of submission or late submission of WUD -> Automatic de-commitment of balance and a financial correction WUD not submitted and signed by the designated person or department: WUD considered non- admissible -> non-submission Minimum percentage of obligatory sample checks not achieved Insufficient quality of controls: cannot be included in 5% -> above case Non-representativeness of sample High level of irregularities Insufficient treatment of errors/irregularities Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

21 Financial corrections may be applied when: WUD does not come to a conclusion about validity of final balance application or legality and regularity of transactions WUB does not conclude on frequency of irregularities or does not estimate extent of the problem and financial impact WUB issues reservations related to systemic weaknesses but does not estimate the financial impact of these weaknesses, or if it makes a general reservation or declares itself incapable of giving an opinion Insufficient quality of other information in WUD or report -> Additional information requested to MS. If not submitted a correction Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy

22 Thank you for your attention. Questions, comments? Technical Meeting on Closure , 11 December 2009 European Union Cohesion Policy